Lawmakers need to lower drug prices, not bail out Big Pharma

Gary Williams Jr. is a disability advocate who lives in Fresno.
Contributed

The Trump administration is pushing a dramatic change to prescription drug pricing this summer, and every day it looks more like a giveaway to Big Pharma at the expense of our seniors and disabled Americans.

It’s called the “Rebate Rule” and is being spun as a way to tackle out-of-control costs of prescription drugs. As an advocate for the disabled in Fresno County, that sounds like long overdue reform. But when you look at the details — and many experts have — you’ll see it would hand billions to the same pharmaceutical companies who caused the drug pricing crisis in the first place, without any guarantees of lowers costs for our most vulnerable friends and family members.

There’s a lot of finger-pointing about why prescription drugs cost so much. Here are the facts: A 2017 study done by the University of Southern California found that brand-name drug companies keep three out of every four dollars of the price of the medications we buy, and yet the prices climb ever higher.

And at a time when the pharmaceutical industry is making record profits, they continue to block competition and increase the list prices of life-saving drugs year after year. Now, as they try and push this “Rebate Rule,” Big Pharma is trying to point the finger at entities called pharmacy benefit managers (PBMs), who negotiate prescription drug benefits on behalf of employers.

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PBMs help to lower premiums and out-of-pocket costs for millions of Medicare Part D recipients in California by negotiating discounts on these drugs. The proposed Rebate Rule would ban this practice — giving Big Pharma complete control over the prices they charge.

Under this rule, California patients and taxpayers lose, while Big Pharma wins. The government’s own actuaries at the Centers for Medicare and Medicaid Services (CMS) estimate that this plan would hike Medicare Part D premiums for seniors and the disabled by 25 percent — with a 19 percent increase in 2020 alone. Another study from Avalere Health found that these premiums could rise as much as 40 percent, amounting to an $85.7 billion increase.

Many, many, American with disabilities are on a fixed income, typically ranging between $800 and $1,800 a month. Hikes in Medicare Part D premiums impose great sacrifices on these individuals, often cutting into money for groceries, heat and other essentials.

None of this even addresses the issue that every year fewer prescriptions are covered be these insurance policies. Since the person still requires medication, they have no choice but to either pay out of pocket or gamble with their health. This starts an entirely new domino effect. The person becomes ill since they can’t afford the medication, resulting in visits to the ER.

This is a bad deal for consumers, and for taxpayers. The same estimates that show massive hikes to consumers also found that this rule would cost taxpayers $196 billion in increased federal spending in the next decade. Other estimates are even higher; Avalere Health found that it could cost taxpayers up to $410 billion.

If enacted, this rule would be one of the most expensive regulations in U.S. history and would cost more than the Congressional Budget Office projected the creation of the Medicare Part D program would cost.

On top of all that, Big Pharma is the only beneficiary of this proposal, and stands to receive a bailout of $137 billion. No wonder pharmaceutical companies are backing the so-called “Rebate Rule” — pharmaceutical executives could continue to pad their bottom lines and keep their shareholders happy while avoiding blame or repercussions for the crisis they created.

Not only would this rule bail out Big Pharma on the backs of our nation’s most vulnerable, but there’s little evidence that eliminating rebates would do little, if anything, to even reduce drug prices. Most drugs, including 89 percent of Medicare Part D prescriptions, do not even receive rebates. In fact, those same CMS actuaries estimate that under the rule, prices could actually increase.

Big Pharma has gotten away with putting profits over people for too long. Congressman Devin Nunes (R-Tulare) should use his committee positions to hold these companies accountable by focusing on smart solutions that increase competition and transparency to provide real relief for Californians struggling to afford their medications.

Gary Williams Jr. lives in Fresno. A former chairman of the Fresno County In-Home Supportive Services Advisory Committee, he has been a disability advocate since 1986.